Suppose the Economy Is at a Point Below Its Institutional

question 103

Multiple Choice

Suppose the economy is at a point below its institutional production possibilities frontier.To improve this situation,Keynesian economists might propose that the government should __________ expenditures,which will cause the aggregate demand curve to shift to the __________ in an attempt to close this __________ gap.

• A) decrease; left; inflationary
• B) increase; right; inflationary
• C) decrease; right; inflationary
• D) increase; right; recessionary
• E) decrease; left; recessionary

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Definitions:

Inductive Reasoning

A reasoning method where several assumptions, considered true or mostly true, are fused together to derive a particular outcome.

Deductive Reasoning

A logical process in which a conclusion follows necessarily from the stated premises; it is inference where true premises develop a true conclusion.

Skeptical

Being skeptical involves doubting or questioning the validity or authenticity of something.

Well-defined

Clearly described or outlined, with no ambiguity or confusion about the nature or limits of something.